It’s time for the gas majors to tackle methaneNigel Topping, CEO of the We Mean Business coalition
Like it or not, natural gas is expected to be a big part of the global energy picture for sometime to come.
In fact, despite the ongoing surge in renewable capacity, the role of gas in the global energy mix is expected to grow. According to the International Energy Outlook 2017, gas consumption is forecast to grow more than 40% and account for the largest increase in global primary energy consumption out to 2040. Though Bloomberg New Energy Finance expects gas to play more of a transitional role, with capacity rising 16% by 2040 as coal generation peaks in 2026 and renewables increasingly dominate.
While gas can help drive a switch away from coal, which has potential benefits in stalling the rise in global emissions, there are many uncertainties around how the sector will adapt to the widespread implementation of the Paris Agreement. However, one thing is increasingly clear – it’s time for the sector to tackle its methane emissions.
Methane only accounts for around 16% of global greenhouse gases, while CO2 accounts for around three quarters. However, although methane is ‘shorter-lived’, it is over 80 times more potent than CO2 in terms of global warming over a 20-year horizon.
With the oil and gas industry being the chief emitter of methane after agriculture, the industry’s seeming inability to tackle the problem raises questions about its future in the low-carbon economy. However, this month there have been two positive developments that suggest progress can be made.
Firstly, analysis from International Energy Agency (IEA) in its latest World Energy Outlook (WEO) 2017 found that around 40% to 50% of current methane emissions from the oil and gas sector worldwide could be avoided at no net cost.
Of the 76 million tons of methane emissions estimated in 2015 from oil and gas operations globally, the IEA estimates using newly developed “marginal abatement cost curves” that it is technically possible to avoid about three-quarters of the total emissions. And some of that abatement would even be cash positive thanks to the potential to sell captured methane.
The WEO outlook estimates under its central scenario that by implementing only the cost-effective measures, the impact would cut global temperature increases by 0.07 degrees, by 2100. That’s roughly equivalent to shutting off all the existing coal-fired power plants in China immediately.
Secondly, the Oil and Gas Climate Initiative (OGCI), which represents ten of the sector’s largest companies – Reliance, Saudi Aramco, Shell, Eni, CNPC, Pemex, Repsol, Statoil, Total and BP – this month announced its goal to work towards net zero methane emissions from the gas value chain.
The OGCI notes that “if gas is to play a role in longer-term decarbonisation, the issue of methane emissions have to be addressed at scale.”
This is because there is an argument to suggest that gas can only play a role in the first stages of the energy transition. If this were the case, it would leave widespread gas infrastructure and supply sources that could be an obstacle to deeper emission reductions in later decades, the OGCI said.
According to OGCI data, methane emissions from the seven companies reporting data rose 24% in 2016, largely due to the “consolidation of a major acquisition by one company and maintenance issues in compression facilities in another.”
Over the past decade, methane emissions have risen 9%, with a 13% increase over the past five years, the OGCI said.
As part of its efforts to achieve net zero methane emissions from the gas value chain, the OGCI is committing to establish a methodology to improve the collection, verification and reporting of methane data. It will also develop a baseline for emissions and announce a target by the end of 2018.
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